Smooth "stepless" terrain/mesh editing (ingame)

Yes and they can get really big textures when used for terrains (so some clever trick is needed).

But I think the whole point of this thread is that he wants arbitrary shaped terrains.
There are some techniques and articles for that, but it’s a complex matter.
Full voxel terrains like in Voxel Terrain System
might be what you want.
Or you can use Another CSG solution
to cut holes into your landscape.